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Parallel Session 2: “Lessons from the NBER Project on African Economic Successes”

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This session started with a brief overview of the project by David N. Weil, one of the directors of the NBER project.  Following the overview, results from four sub-projects were presented by the researchers who conducted them.   The session was chaired by Augustin K. Fosu of the World Institute for Development Economics Research. 

The Project on African Economic Successes is a five-year research endeavor funded by the Bill and Melinda Gates Foundation and administered by the National Bureau of Economic Research.  The co-directors of the project are Sebastian Edwards, Simon Johnson, and David N. Weil.  The goals of project include informing policy making in Africa and elsewhere, strengthening the research base on African economies, building links between African researchers and those elsewhere, and bringing new researchers to the study of African development.  A particular interest of the project, as evidenced by its name, is in things that are going well in Africa.  This includes new technologies and industries, successful health interventions, increases in market integration, better functioning institutions, and successful post-conflict transitions.  However, having a “success” to report was definitely not a requirement for inclusion in the study.  
To facilitate these goals, the NBER has commissioned 40 sub-projects.  There are a total of 85 Principal Investigators, of whom 20% are African.  The NBER conducted two “pre-conferences” in which preliminary work was discussed, as well as two “research conferences” (Cambridge 12/2009 and Accra, 7/2010) at which final projects were presented.  The final research conference will take place in Zanzibar on 8/11).  Completed research papers are available as NBER working papers, and will eventually appear in edited volumes from the University of Chicago Press.   Information on all the commissioned projects as well as completed papers and videos of conference presentations are available at

The topics of the projects fall into the following categories (with the number of projects in parentheses): 

  • Agriculture / Food (5)
  • Mobile Phones (2)
  • Health / Fertility / Education (6)
  • Political Economy  / Conflict  (5)
  • Finance / Capital Allocation  (6)
  • Government Regulation and Transfers  (3)
  • Market Integration / Efficiency (3)
  • Gender Issues (4)
  • Country Studies (3)
  • International Trade (4)

A total of 24 different countries in sub Saharan Africa are studied in one or more papers.
Following this overview, four papers were presented.   Weil presented his paper “Mobile Banking: The Impact of M-Pesa in Kenya,” joint with Isaac Mbiti.  M-Pesa is a mobile phone based money transfer system that has grown at a spectacular pace since its creation four years ago.  Mbiti and Weil use successive waves of the financial access survey to document how M-Pesa has displaced pre-existing means of money transfer and to examine the characteristics of M-Pesa users.  The second part of the paper examines the monetary economics of M-Pesa.  Mbiti and Weil discuss how monetary concepts such as velocity and the “cash loop” can be applied to e-money, and present estimates of these quantities.  Finally, they exploit “notches” in the M-Pesa tariff schedule, along with data on the size distribution of withdrawals, to estimate the implicit discount rate being applied by M-Pesa users. 

Douglas Gollin presented his paper “Agriculture, Roads, and Economic Development in Uganda” (joint with Richard Rogerson).  See video of an earlier presentation here.   The paper examines the relatively slow structural transformation of African economic activity, particularly the persistence of semi-subsistence agriculture: in some countries, more than 75 percent of the population is employed primarily in agriculture, and much of their production is intended for home consumption.   Gollin and Rogerson focus on the high cost of transportation as one explanation for this. African road networks are notoriously poor, especially in rural areas. High transportation costs necessarily imply high input costs and low output prices for agriculture. Building on recent field work in Uganda, the researchers document some key facts about transportation costs and offer a simple general equilibrium model to explore some counterfactual experiments. Their results suggest that the fraction of the population in semi-subsistence agriculture is highly sensitive both to agricultural productivity levels and to transportation costs. Their model also suggests positive complementarities between simultaneous improvements in agricultural productivity and transportation.

 William Jack presented his paper “State versus Consumer Regulation: The Case of Road Safety in Kenya,” joint with James Habyarimana.  Road accidents are a major and growing source of mortality and injury in developing countries. The unnecessary deaths and injuries of prime‐age working adults are associated with lost output, medical and funeral expenses, and deleterious effects on schooling and other child outcomes, all of which can have long‐lasting effects. Habyarimana and Jack evaluate two approaches to improving the safety of road travel, focusing in particular on the matatu (14-seater minibus) sector in Kenya. First, they evaluate the impact of a regulatory change that took place in early 2004 under the so-called Michuki reforms that focused on public service vehicles, including matatus. Second, using a randomized controlled trial, they evaluate an intervention designed to affect matatu driver behavior through consumer empowerment – which circumvents the chronically corrupt police and law enforcement agencies entirely. They evaluate the Michuki reforms using a comprehensive set of insurance claims data from before and after the intervention. They control for secular trends in accident rates using vehicles that were unaffected by the reforms. In their randomized controlled trial, they target matatu passengers, empowering them to enforce better driver behavior, by placing evocative messages inside the vehicles encouraging them to “speak up” when confronted with dangerous driving. They recruited about 4,000 matatus, and put in place at least two treatment arms, differentiated by type and duration of message.  Insurance data are used to estimate the impacts of each intervention relative to a control group.

Yaw Nyarko presented his paper “The Returns to the Brain Drain and Brain Circulation in Sub-Saharan Africa: Some Computations Using Data from Ghana” (working paper here).  The paper examines the economics of brain drain from the points of view of both the social planner in the sending country and the individual. In particular, it looks at the value of spending government resources on tertiary education in the face of significant emigration of graduates.  Nyarko estimates the net present value of costs and benefits from this spending.  Significantly, he includes in benefits both remittances from those who have emigrated and increased human capital and wealth from those who emigrate and then return.  Using data from Ghana on costs of education, probabilities of emigration and return migration, monetary value of remittances, and labor market returns to schooling, Nyarko concludes that the possibility of brain drain does not reduce the PDV of spending on tertiary education.   He suggests that there may be room for creative thinking about the possibility that the brain drain could provide mechanisms for dramatic increases in education levels within African nations.


David N. Weil

Professor, Brown University

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